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Less is More

One change now surfacing within the disability market, according to John Ryan, a Greenwood, Colorado insurance consultant to financial advisors, is John Hancock's approach to the long-term care insurance inflation rider in its new Leading Edge policy. Ryan says that while this rider has historically been a a fixed percentage, "like 5%," says Ryan, "the new one is tied to the CPI." Advisors should be aware of this, because, as Ryan points out, if the CPI is under 5%, then "folks aren't getting as good a deal as with a fixed rate."

The new product, while "at least 20% less expensive," offers clients potentially fewer benefits, according to Ryan. There's a five-year benefit period, and clients can buy an additional $1 million lump sum. If they exhaust the five years of benefits, says Ryan, they can access this million-dollar pool, but "the downside is that $1 million doesn't inflate." This can substantially reduce benefits through losses to inflation.

While Leading Edge offers no unlimited coverage, Hancock still offers its Custom Care 2 plan, which "has all the bells and whistles and unlimited coverage." Ryan adds that there are more classes available with Custom Care 2 than with Leading Edge, so that a client turned down for coverage with Leading Edge still has the option of purchasing Custom Care 2.